A data room is an online platform that is secure for sharing and storing confidential information with authorized users. They are either physical or virtual and are often employed to complete legal or financial due diligence during a transaction, but can also be useful for planning business or fundraising, and even for ensuring regulatory compliance.
Data rooms are commonly employed in M&A transactions in which both parties have access to a repository of privileged information they must not divulge. Numerous businesses of all sizes and types rely on data rooms to ensure secure collaboration and file sharing – particularly small and emerging businesses who may not have the time or budget to invest in a office setup.
When choosing a provider of a data space, choose one that comes with a full suite of reports about user activities. This includes who has accessed what documents and if they’ve printed or downloaded them. This is essential to ensure that confidential information isn’t slipped into in the wrong hands, which could be a major concern for businesses that are considering selling their business or fundraising.
It’s also worth thinking about the possibility of a data room that has an integrated question and answer (Q&A) tool that can be helpful to keep discussions about due diligence on the right track during a transaction as well as lessening the risk of sensitive information being shared outside of the data room. Also, it’s important to choose a data room solution that has plenty of storage capacity for the documents and files you plan to upload – plus, simple task management tools which can assist you in assigning the task of reading or uploading documents to your team members and advisers.